LONDON (Reuters) - BP's head of exploration Richard Herbert is leaving the British oil major after slightly more than two years in the job, a period in which the company slashed spending on the search for new deposits.
Herbert, a BP veteran and...

MADRID (dpa-AFX) - Talisman Energy Inc. (TLM, TLM.TO) reported that its net
loss for the first quarter of 2015 was $439 million, compared to net income of
$491 million in the first quarter of 2014. The prior year result included gain
on sale of...

Enterprise Products Partners L.P. (EPD) declared an increase in the quarterly cash distribution paid to partners to $0.375 per common unit, or $1.50 per unit on an annualized basis. The quarterly distribution will be paid on Thursday, May 7, 2015,...

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Talisman Energy (NYSE:TLM) is primarily an Oil and gas exploration and production company with some natural gas midstream operations in Canada. Their operations can be segmented into 3 sections: North America (primarily Canadian natural gas), North Sea (mostly oil) and Southeast Asia (mostly oil with some nat. gas). They also have non-operating interests in African energy plays.

This is a relatively more exciting company in the oil space. Almost all of the growth visibility is mired in nasty oil sands, politically hostile territories, deep beneath the ocean or in the hands of national oil companies who put politics ahead of profits. Throw in an escalating cost environment and the outlook for oil companies is highly uncertain, even as the outlook for the commodity couldn't be stronger.

Company Overview

Like many growing resource companies, TLM's capital expenditure is uneven, swinging from heavy outlays one year to big free cash flow (FCF) another year. At some point, the company has to be able to convert its assets into cash for the owners.

Trends and Forces

Divesting Non core assets

Contents

Looking at their capital structure, the company is in the process of divesting non-core assets. They're in the midst of a share buyback program and plan on using sales proceeds to pay down some of the debt and for buybacks. The company pays a small dividend (1% yield on 8% payout ratio) but has increased it near 20% annually over the last few years. The trend of divesting non core assets should help the company improve their overall profitability as it allows TLM to focus on areas where they have the most expertise.

Diverse Portfolio

TLM has a widely diverse portfolio. For instance, they have a big natural gas component in Canada, which is expected perform well as oil sands production ramps up. They also have light oil crude assets in the North Sea and Southeast Asia are in high-demand with good price realizations. Furthermore, Talisman has divested their oil sands assets and now has no bitumen reserves in its portfolio. The diversity of TLM's products as well as its geographic diversity makes TLM's risk lower than it otherwise would be.

Competitors

EnCana– refocused on Canadian oil sands projects and North American natural gas

Huge gas wells drilled in the Deep Bossier region of TX

Partnering with ConocoPhillips in the oil sands play

Oil sands subject to significant cost overruns

Rockies exposure not ideal

Devon Energy- attractively valued but paying more for revenues; more balanced gas/oil portfolio
Barnett Shale- holdings should provide stable reserves replacement for years